FARM DEBT increased again during the second quarter of the year, according to the latest Bank of England figures.

Lending rose to £8.75bn – 2% up on the previous three months and 4.5% on the same period in 2004.

John Barker, senior agriculture manager at HSBC Bank, said the quarterly rise was to be expected as farmers invested in the 2005 harvest, but the year-on-year trend was due to pressure on profits and cashflows across all farming sectors.

Bank deposits also rose slightly on the year to £3.57bn.

“These figures confirm that the gap between those that are doing well and those that are struggling appears to be widening,” said Mr Barker.

On a more positive note, the recent 0.25% cut in base rates would allow farmers to borrow an extra 15% for three to four months without incurring extra costs, if they needed cover for delayed single farm payments, he added.